Paying attention to geographical and cultural nuances helps digital vendors to offer the right mix of shopping tech and payment options.

Retail commerce, including in-store shopping, has transformed almost completely into ‘digital commerce’—the term used to describe the blend of online and offline commerce that we all enjoy today.

Regardless of whether the purchasing processes or payment methods are digital, platforms that offer digital commerce are now an integral part of the retail experience. This has empowered even the smaller brands with global aspirations to scale quickly across regions, reach new markets, and to gain market share.

However, so this is often easier said than done. In many parts of the world and regionally in growing South-east Asian markets like Indonesia, digital transformation represents the growth of socio-economic consumer groups, internet infrastructure, and the prolific usage of smartphones.

Across geographical regions, the different consumer groups evolve at different stages, with some markets witnessing a more competitive e-commerce landscape than others. For businesses to capture a slice of the different pies, they need to match payment capabilities to the complexities and nuances of the regions in which they operate. Here are three considerations to ponder …  

  • The New Commerce, from E to M
    There is no longer a distinct line between ‘traditional’ retail and e-commerce. Whether shopping is done online or in-person, for household supplies or for clothing, traditional purchase behavior tends to be routine and deliberate, as opposed to one-off purchases. Such transactions are always conducted with a preferred payment method: if a preferred payment method is not available, the shopping cart is likely to be abandoned.

    For higher conversion rates, apps offer pre-programmed transactions with automated payment authorization. In fact, apps have the potential to convert three times better than mobile websites. For example, the likes of Grab and Foodpanda have built their business around this on-demand model powered by apps that function like commerce utilities, catering to more of the spontaneous purchases made whenever the need arises.
  • Cards? Who needs cards?
    While plastic cards may be used like cash in some economies, this payment behavior is quickly being supplanted in the Asia Pacific region by even more convenient payment methods. For example, payment wallets like Fave or GrabPay and QR code payments are a commonly used form of payment in Singapore.

    Such transactions are thought of as ‘pull’ transactions since they pull the necessary funds from a store of value somewhere else. In this case, the web browser serves as the ‘wallet’.

    Note that app-based m-commerce is extremely effective in driving conversions because shoppers engage with their phones in such a habitual way: messaging, scrolling through social and news feeds, playing games (which are themselves often a form of m-commerce with their in-app purchases.) This almost reflexive behavior lowers barriers to purchase, as does completing purchases utilizing local preferred-payment methods.
  • Banks as bands, not places
    As electronic platforms continue to enable increasingly efficient commerce, the distinctions between banks and payments companies are beginning to blur, with digital payment platforms function more like banks.

    The implication for e-commerce and m-commerce is that purchase transaction behavior will become even more reflected. This also means the relationships between the local payment methods and the consumers who use them will become more closely aligned. This, in turn, means that merchants conducting cross-border commerce or serving international clientele need to tap into these systems if they are to thrive and grow their customer base.

    In fact, the change to more convenient electronic payment methods tends to be driven by habits adopted in youth. This means the move to truly cashless commerce that does not rely on credit cards is inexorable and will accelerate, relying on a growing range of electronic local payment methods. 

Retailers looking to succeed in this world will need to look past their websites or even their apps, all the way into their customers’ wallets.